Hot Fuels Report Findings Adopted by
California Energy Commission

SACRAMENTO - The California Energy Commission today adopted a report examining the consumer costs and benefits of installing automatic temperature control (ATC) devices at retail service stations. The legislatively-mandated AB 868 Fuel Delivery Temperature Committee Report finds that installing ATCs would provide a more exact measurement of gasoline but at a slightly higher cost.

Combined, the net effect of ATC would be a small cost, due to the cost of installing and maintaining the ATC devices. The report; however, noted that some consumers might be willing to pay this additional cost to increase the accuracy and consistency of fuel dispensers. The report and its recommendations will be sent to the Legislature.

"The impact of temperature on gasoline deliveries has been debated nationally for years. Potentially receiving less gasoline than they're paying for can be a real concern for California consumers," commented Chairman Karen Douglas. 'This report clarifies the issue, finding that the cost to consumers of fuel temperature variations is less significant than some have feared.'

The report, based on Energy Commission staff analysis with input from the California Department of Food and Agriculture and California Air Resources Board, finds that gasoline sold in California averages 70 degrees Fahrenheit, while the standard fuel reference temperature is 60 degrees Fahrenheit. Like all liquids, fuel expands and contracts with temperature change, so warmer fuel contains less energy per gallon than colder fuel. The difference in energy content between 60 degree and 70 degree fuel is about two-thirds of one percent.

The report also finds that if ATC devices were required in California, retail stations would dispense slightly larger gallons of fuel, but would most likely increase per-gallon prices somewhat to compensate for the change. The real benefit to consumers would be in situations that the fuel temperature differs between adjacent fueling stations. This benefit was quantified as part of the study's estimate of price transparency, which was found to be $258,000 statewide. By comparison, the cost of installing ATC devices on all fuel pumps would total between $104 million - $127 million statewide for the first year, and recurring annual costs for maintenance and inspections are estimated at $7 million - $20 million. If all of these costs were passed through to consumers, the price of fuel would increase by between eight hundredths (8/100) and 18 hundredths (18/100) of a cent per gallon over 10 - 15 years.

Although the report concludes that installing ATC devices would result in a net cost for consumers, the Energy Commission recommends that the Legislature also consider whether consumers would be willing to pay a small additional cost to increase the accuracy and consistency of fuel measurement. In addition, the report notes that a phase-in of ATC devices when pumps are replaced or upgraded would reduce the cost, although the costs would still exceed the quantified benefits.